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Standard Cash Transaction

A property is purchased outright with cash or hard money. This type of transaction does not involve a financing contingency.

Standard Financed Transaction

A property is purchased using financing from a traditional bank. This type of transaction typically includes a financing contingency to protect the buyer.

Wholesale Transaction

In a wholesale transaction, an investor purchases a property without intending to retain it for their portfolio.

• A-B Contract: The agreement between the seller and the investor.
• B-C Contract: The agreement between the investor and the end buyer.

Lending (Private and Short-Term)

Lending involves providing funds for short-term transaction funding or long-term secured loans. Unlike investing, lenders do not gain ownership or equity. Lenders receive a flat return or interest payments instead of a share in profits.

Loan Sponsorship

Loan sponsorship occurs when an individual or entity acts as the qualifying party to secure a loan for an investment project in partnership with others.

Seller Carry

In this arrangement, the seller owns the property free and clear and acts as the lender. The seller “carries” the loan for the buyer, allowing the transaction to proceed without traditional financing.

SubTo (Subject To)

A buyer purchases a property while the seller’s existing lien(s) remain in place. The buyer assumes responsibility for continuing the payments while obtaining title and ownership.

Hybrid Transaction

A combination of Seller Carry and SubTo, a hybrid transaction involves:

• The seller’s existing lien(s) staying in place.
• All or part of the seller’s equity held as a second-position lien.

Agreement for Sale (Executory Contract)

Sometimes referred to as a Contract for Deed, Land Contract, or Bond for Deed, this arrangement works similarly to vehicle financing:

• The buyer does not receive legal title until the agreement is fulfilled or the property is paid off.
• The seller retains legal title while the buyer holds “equitable” title.

Novation

Novation agreements enable sellers to profit from renovations they cannot afford themselves. The investor partners with the seller, renovates the property, and shares the profits from the sale.

Wrap-Dispo

This strategy is often used when an investor purchases a non-cash-flowing property:

• The property is bought subject to the seller’s existing loan.
• The investor “wraps” the original loan into a new loan that includes their equity.
• The end buyer purchases the property under the new terms.

Morby Method

This approach is used when a seller requires a large down payment (50-70%) but is willing to finance part of the loan.

• The buyer secures a loan for the full purchase price from a traditional or hard money lender.
• The down payment and closing costs are covered using personal funds or private lenders.
• The seller finances the down payment and closing costs (or more) by holding a second-position lien or a stake in the title entity.

Servicing

A third-party company that receives monthly payments from buyers and disperses funds to lenders, taxes, insurance, and any additional obligations.